1
EXHIBIT 10.9
AMENDMENT
Effective as of August 1, 1996
To the
SKYLINE ASSET MANAGEMENT, L.P.
(A Delaware Limited Partnership)
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
Dated August 31, 1995
The Amended and Restated Limited Partnership Agreement of Skyline Asset
Management, L.P. dated August 31, 1995 (the "Partnership Agreement") is hereby
amended as of this first day of August, 1996 as set forth below. Capitalized
terms used herein and not otherwise defined shall have the meaning ascribed to
such terms in the Partnership Agreement.
1. Section 3.3(a) and Section 3.3(c) of the Partnership Agreement are each
hereby amended by the addition of the following sentence as the last
sentence of said Section 3.3(a) and said Section 3.3(c):
Notwithstanding the foregoing, effective only during the months of
August, 1996 and September, 1996, the Officers may cause the
Partnership to incur expenses or obligations (including without
limitation, salaries and bonuses) that exceed its ability to pay or
provide for than out of its Operating Cash Flow by $150,000; provided
that such $150,000 excess may only be an obligation of the Partnership
to pay the CEO of the Partnership compensation, which compensation may
only be paid to the CEO as follows: $30,000 may be paid in August,
1996, $30,000 may be paid in September, 1996, and the remaining $90,000
may only be paid after the Partnership has made all distributions
pursuant to Section 5.3(a) of the Partnership Agreement with respect to
the fiscal quarter ended September 30, 1996 (the "1996 CEO Compensation
Payment").
2. Section 3.10(c) of the Partnership Agreement is hereby amended and
restated to read as follows:
(c) The number of shares of AMG Stock to be issued upon
exercise of the Put shall be determined in accordance with the following
formula:
Number of Shares
of AMG Stock = ((FCF x Percentage Put) x AMG's EBITDA Multiple x .75) + IC
----------------------------------------------------------
AMG's Average Stock Price
2
Where:
FCF = an amount equal to fifty percent (50%)
of the Partnership's Free Cash Flow for the
twenty-four (24) months ending on the
December 31 prior to the date of the closing
of such Put.
Percentage Put = a fraction, the numerator
of which is the number of Partnership Points
to be purchased from the Selling Partner on
the Purchase Date, and the denominator of
which is the number of Partnership Points
outstanding on the Purchase Date before
giving effect to any Puts or any issuances
or redemptions of Partnership Points on such
date.
AMG's EBITDA Multiple = a fraction, the
numerator of which is (a) the number of
shares of AMG Stock issued and outstanding
immediately prior to the closing of the Put,
multiplied by AMG's Average Stock Price,
plus (b) the long-term indebtedness
(including the current portion thereof) of
AMG as of the date of its most recent public
financial reports prior to the closing of
the Put, and the denominator of which is
fifty percent (50%) of AMG's earnings before
interest, taxes, depreciation and
amortization for the twenty-four (24) month
period ending on the 31st day of December
prior to the date of the closing of the Put.
IC = an amount equal to a fraction of any
Positive Capital Account balance of such
Limited Partner (to the extent that such
positive balance results from contributions
to capital, retained earnings or similar
events, but excluding any positive Capital
Account balance resulting from an interim
Closing as described in Section 5.2(h) or
similar book- up event), the numerator of
which is the number of Partnership Points
included in the Partnership Interest to be
Purchased on the Purchase Date, and the
denominator of which is the aggregate number
of Vested Partnership Points held by such
Selling Partner
3
AMG's Average Stock Price = the average
(arithmetic mean) Stock Price of AMG Stock
during the twenty (20) trading days prior to
the date of the closing of the Put. The term
"Stock Price" shall mean the closing price
for each day for the AMG Stock which shall
be the last sale price or, in the case no
such sale takes place on such day, the
average of the closing bid and asked prices
in either case as reported in the principal
consolidated transaction reporting system
with respect to securities listed on the
principal national securities exchange on
which the AMG Stock is listed or admitted to
trading; or, if not listed or admitted to
trading on any national securities exchange,
the last quoted price (or, if not so quoted,
the average of the last quoted high bid and
low asked prices) in the over-the-counter
market, as reported by NASDAQ or such other
system then in use; or, if on any such date
no bids are quoted by any such organization,
the average of the closing bid and asked
prices as furnished by a professional market
maker making a market in such security
reasonably selected by the Board of
Directors of AMG.
In the event that there is any stock split (or reverse stock split), stock
dividend or other similar event, equitable and appropriate adjustments shall be
made in the application of the foregoing calculation of AMG's Average Stock
Price to take account of such event.
3. Section 5.2(d)(ii) of the Partnership Agreement is hereby amended by
the addition of the following as the last sentence of said Section
5.2(d)(ii):
Notwithstanding the provisions of this clause (ii) to the contrary,
effective only for the calendar month ended September 30, 1996, at the
end of the calendar month ended September 30, 1996, items of deduction
attributable to the 1996 CEO Compensation Payment, if any, shall be
allocated to WMD Corp. (or any successor to WMD Corp.'s interest) prior
to any other allocations of deduction and loss pursuant to this Section
5.2(d)(ii).
3. Exhibit A to the Partnership Agreement is hereby Amended and Restated
in the form attached hereto as Exhibit A.
4
IN WITNESS WHEREOF, the undersigned have caused this Amendment to the
Partnership Agreement to be executed as of this first day of August, 1996.
GENERAL PARTNER
AFFILIATED MANAGERS GROUP, INC.
By:/s/ Xxxx X. Xxxxxx
---------------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President
LIMITED PARTNERS
WMD CORP.
By:/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
KSK CORP.
By:/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
GXL CORP.
By:/s/ Xxxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxxx X. Xxxx
Title: President
MXM CORP.
By:/s/ Xxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
5
EXHIBIT A
ATTACHED TO AND MADE A PART OF
THE AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF
SKYLINE ASSET MANAGEMENT, L.P.
PARTNERSHIP
POINTS
-----------
Vested Partnership Points Issued to General Partner:
Affiliated Managers Group, Inc. 55
Vested Partnership Points Issued to Limited Partners:
WMD Corp 22
KSK Corp. 4
GXL Corp. 3
MXM Corp. 1
---
Total Limited Partners 30
TOTAL VESTED 85
Unvested Partnership Points:
KSK Corp. 4(a)
GXL Corp. 2(b)
Reserved - Hurdle Points 4(c)
Reserved - Discretionary Points 5(d)
---
TOTAL UNVESTED 15
TOTAL 100
===
-----------------
(a) MID-CAP POINTS: These four (4) Partnership Points (the "Mid-Cap
Points") are unvested Partnership Points issued to KSK Corp. as of the
Effective Date. The Mid-Cap Points shall vest and become Vested
Partnership Points as follows:
6
(i) If the sum of (A) Revenues From Operations of the
Partnership attributable to providing Investment Management Services in
accordance with the Partnership's Midcapitalization Value Equity
Management strategy ("New Mid-Cap Revenues") annualized based on the
assets under management as of the last business day of any month (each,
a "Vesting Test Date") plus (B) the Revenues from Operations of the
Partnership attributable to providing Investment Management Services in
accordance with the Partnership's Skyline 2500 Product ("2500 Product
Revenues") based on the assets under management as of that Vesting Test
Date multiplied by .75, exceed the Revenues From Operations of the
Partnership attributable to providing Investment Management Services in
accordance with the Partnership's Midcapitalization Value Equity
Management strategy annualized based on the assets under management as
of the Effective Date (the "Mid-Cap Base") by at least $750,000 (for
any reason including contributions to new or existing accounts,
increases in fees payable to the Partnership or appreciation in the
value of the assets of the accounts), then one (1) Partnership Point
shall vest and become a Vested Partnership Point as of such Vesting
Test Date.
(ii) If the sum of (A) the New Mid-Cap Revenues annualized
based on the assets under management as of any Vesting Test Date plus
(B) the 2500 Product Revenues based on the assets under management as
of that Vesting Test Date multiplied by .75, exceed the Mid-Cap Base by
at least $1,500,000 (for any reason including contributions to new or
existing accounts, increases in fees payable to the Partnership or
appreciation in the value of the assets of the accounts), then one (1)
Partnership Point (in addition to the Point described in the preceding
paragraph) shall vest and become a Vested Partnership Point as of such
Vesting Test Date.
(iii) If the sum of (A) the New Mid-Cap Revenues annualized
based on the assets under management as of any Vesting Test Date plus
(B) the 2500 Product Revenues based on the assets under management as
of that Vesting Test Date multiplied by .75, exceed the Mid-Cap Base by
at least $2,250,000 (for any reason including contributions to new or
existing accounts, increases in fees payable to the Partnership or
appreciation in the value of the assets of the accounts), then one (1)
Partnership Point (in addition to the Points described in the preceding
paragraphs) shall vest and become a Vested Partnership Point as of such
Vesting Test Date.
(iv) If the sum of (A) the New Mid-Cap Revenues annualized
based on the assets under management as of any Vesting Test Date plus
(B) the 2500 Product Revenues based on the assets under management as
of that Vesting Test Date multiplied by .75 exceed the Mid-Cap Base by
at least $3,000,000 (for any reason including contributions to new or
existing accounts, increases in fees payable to the Partnership or
appreciation in the value of the assets of the accounts), then one (1)
Partnership Point (in addition to the Points described in the preceding
paragraphs) shall vest and become a Vested Partnership Point as of such
Vesting Test Date.
7
(v) If any Mid-Cap Point has failed to vest in accordance with
the foregoing paragraphs by the sixth anniversary of the Effective
Date, such Partnership Point shall terminate unvested.
(vi) Any Mid-Cap Points that terminate unvested in accordance
with the preceding paragraph or in accordance with Section 3.8(a) may
be reissued only by mutual consent of the CEO and the General Partner.
(b) MARKETING POINTS: These two (2) Partnership Points (the "Marketing Points")
are unvested Partnership Points issued to GXL Corp. as of the Effective Date.
The Marketing Points shall vest and become Vested Partnership Points as follows:
(i) If the Revenues From Operations of the Partnership
attributable to providing Investment Management Services for Qualifying
Assets (as such term is defined below) annualized based on such assets
as of a Vesting Test Date ("New Marketing Revenues") are equal to at
least $375,000, then one-half of one (0.5) Partnership Point shall vest
and become one-half of one (0.5) Vested Partnership Point as of such
Vesting Test Date.
(ii) If the New Marketing Revenues annualized based on such
assets as of any Vesting Test Date are equal to at least $750,000, then
one-half of one (.50) Partnership Point (in addition to the fraction of
a Point described in the preceding paragraph) shall vest and become
one-half of one (0.5) Vested Partnership Point as of such Vesting Test
Date.
(iii) If the New Marketing Revenues annualized based on such
assets as of any Vesting Test Date are equal to at least $1,125,000,
then one-half of one (.50) Partnership Point (in addition to the Point
described in the preceding paragraphs) shall vest and become a one-half
of one (0.5) Vested Partnership Point as of such Vesting Test Date.
(iv) If the New Marketing Revenues annualized based on such
assets as of any Vesting Test Date are equal to at least $1,500,000,
then one-half of one (.50) Partnership Point (in addition to the one
and one-half (1.5) Points described in the preceding paragraphs) shall
vest and become one-half of one (0.5) Vested Partnership Point as of
such Vesting Test Date.
(v) If any Marketing Point has failed to vest in accordance
with the foregoing paragraphs by the sixth anniversary of the Effective
Date, such Partnership Point shall terminate unvested.
(vi) Any Marketing Points that terminate unvested in
accordance with the preceding paragraph or in accordance with Section
3.8(a) may be reissued only by mutual consent of the CEO and the
General Partner.
8
For purposes of this Section (b), the term Qualifying Assets shall mean: assets
under management by the Partnership that have come under management by the
Partnership since the Effective Date by reason of additional contributions by
existing clients or from new clients and, in either case, with respect to which
Xxxxxxxx X. Xxxx has been substantially involved in attracting the client (with
respect to contributions from new clients) or retaining the client (with respect
to additional contributions from existing clients); provided, however, that (i)
in determining Qualifying Assets, there shall be excluded: (A) any assets under
management by the Partnership under the Partnership's Small Capitalization Value
Equity Management Strategy, (B) any assets under management by the Partnership
in an investment company which is registered or required to be registered under
the Investment Company Act, and (C) twenty-five percent (25%) of each otherwise
Qualifying Asset which are assets under management by the Partnership under the
Partnership's Skyline 2500 Product, unless (ii) the CEO elects, in any one or
more instances, in his sole discretion, to include as Qualifying Assets some or
all of such otherwise excluded assets by giving notice of such inclusion to the
General Partner and Xxxxxxxx X. Xxxx.
(c) HURDLE POINTS: These four (4) Partnership Points (the "Hurdle Points") are
not issued as of the Effective Date, but are reserved for issuance as follows:
(i) Subject to the provisions of Section 6.5(e), the CEO in
his discretion may issue all or any portion of the Hurdle Points at any
time, and from time to time, to any one or more persons who are, or
have agreed to become, employed by the Partnership (or are controlled
by persons who are so employed or have so agreed).
(ii) In his discretion, the CEO may elect, prior to the
issuance of any particular portion(s) of the Hurdle Points to any
person ("Undesignated Hurdle Points"), to assign incentive goals with
respect to all or any portion of such Undesignated Hurdle Points, which
incentive goals may be reviewed by the CEO annually for the purposes of
making adjustments thereto. If such incentive goals are satisfied while
the Undesignated Hurdle Points are held in reserve, then following such
satisfaction, the Undesignated Hurdle Points may be issued by the CEO
in his discretion as if they were, and they shall thereupon be deemed
to be, Discretionary Points governed by paragraph (d) hereof. Prior to
such satisfaction, the CEO in his discretion may issue all or any
portion of the Undesignated Hurdle Points at any time, and from time to
time, to any one or more persons pursuant to paragraphs (c)(i),
(c)(iii) and (c)(iv).
(iii) Subject to the provisions of Section 6.5(e), the CEO
shall, at the time of issuance of any Hurdle Points, establish the
terms and conditions of such Hurdle Points, including the terms and
conditions upon which such Hurdle Points shall become Vested
Partnership Points. The terms and conditions pursuant to which Hurdle
Points shall become Vested Partnership Points shall be determined in
the
9
discretion of the CEO for the purposes of providing performance
incentives to the persons receiving such Hurdle Points (or persons by
whom they are controlled), and may be reviewed by the CEO annually for
the purposes of making adjustments thereto.
(iv) Except as described in paragraph (ii) above with respect
to Hurdle Points that have been deemed Discretionary Points, the Hurdle
Points shall be unvested when issued. Any Hurdle Points (or fractions
thereof) that terminate unvested in accordance with Section 3.8(a) or
otherwise fail to become Vested Partnership Points and terminate in
accordance with their terms may be reissued by the CEO in his sole
discretion, provided that such Hurdle Points shall remain Hurdle Points
hereunder and shall remain subject to the provisions of Section 6.5(e)
and this paragraph (c).
(d) DISCRETIONARY POINTS: These five (5) Partnership Points, plus any Hurdle
Points that are deemed Discretionary Points in accordance with paragraph (c)(ii)
above (the "Discretionary Points") are not issued as of the Effective Date, but
are reserved for issuance as follows:
(i) Subject to the provisions of Section 6.5(e), the CEO in
his discretion may issue all or any portion of the Discretionary Points
at any time, and from time to time to one or more persons who are, or
have agreed to become, employed by the Partnership (or are controlled
by persons who are so employed or have so agreed).
(ii) At the time of issuance, the Discretionary Points may be
unvested Partnership Points or Vested Partnership Points, as determined
by the CEO in his discretion. Subject to the provisions of Section
6.5(e), the CEO may establish the terms and conditions of the
Discretionary Points, including without limitation the terms and
conditions upon which any unvested Discretionary Points may become
Vested Partnership Points.
(iii) Any Discretionary Points (or fractions thereof) that
terminate unvested in accordance with Section 3.8(a) or otherwise fail
to become Vested Partnership Points and terminate in accordance with
their terms may be reissued by the CEO in his sole discretion, provided
that such Discretionary Points shall remain Discretionary Points
hereunder and shall remain subject to the provisions of Section 6.5(e)
and this paragraph (d).
